Risk Management

30 Minutes With Secretary of Agriculture Brooke Rollins In Her First Week On the Job

Wed, 19 Feb 2025 21:14:00 GMT

Since Saturday, Nov. 23, 2024 , Brooke Rollins has been focused on how to build the teams and the plans that impact the trajectory of agriculture and rural America. On that day, while en route with her husband and four teenagers in their motor home to Auburn, Ala., for the Texas A&M football game, she got a call from now President Donald Trump. The purpose of his call: She was his top choice to fill his final significant cabinet position, Secretary of Agriculture.

Obviously, she had to wait for confirmation, which came last week on Feb.13 when the Senate overwhelmingly confirmed her as the 33^rd Secretary of Agriculture , but since that Saturday before Thanksgiving, she’s been on the go with an accelerated enthusiasm to understand the significant challenges facing rural communities that lost 147,000 family farms between 2017 and 2022 and why the cost of inputs are up 30% as exports are down $37 billion this year and likely to fall further in the months to come.

“This is a crisis, and this is something that I understand inherently,” Rollins said to kick off Top Producer Summit in Kansas City on Tuesday. “My promise to you is this, and my commitment will never waver, that every minute of every day for the next four years I will do everything within my power, with hopefully God’s hand on all of us and our work, to ensure we are not just entering the golden age for America, as my boss, President Trump, likes to say, but we are entering the golden age for agriculture.”

What Has Rollins Been Up to the Past Four Years?
Secretary Rollins and President Trump have worked together for almost eight years. She was in the West Wing with him for years two, three and four of his first term running his domestic policy agenda.

“This real estate guy from New York City brought that vision to life, and then in the last term, was able to really do some remarkable things,” Rollins said in regard to President Trump returning power to the people who just want a chance at the American dream. “I call it the great pause, the four years in between term one and term two. But I think the great pause allowed very intentional planning. It allowed a courageous and bold leader in President Trump to become a fearless leader and to do everything he can to bring America back to greatness.”

In the “dark days of January 2021,” as she described, Secretary Rollins helped launch the America First Policy Institute, a think tank established by former Trump officials to promote conservative policies. The idea was that those policies that made America great in Trump’s first term would continue indefinitely, not just for a second term, but for four years, eight years or 36 years, Rollins described.

First Week On the Job
Since being confirmed last week, Secretary Rollins has been in the Washington, D.C., USDA office for a few hours, but most of her time has been spent in Kentucky at National Farm Machinery Show in Louisville and Gallrein Farms and in Kansas visiting Finney’s County Feeder, High Plains Ponderosa Dairy and the National Beef Packing Plant .

Describing herself as “a reader and a studier,” Rollins seems adamant to hear firsthand from farmers and ranchers. She referenced her visits to the dairy farm and National Beef facility as inspiring, in a good way but also in a way that helps her understand the real challenges at hand.

Speaking to the crowd at Top Producer Summit, she shared her appreciation for the “entrepreneurial American game changers” who are doing their part to feed the world.

“It is so inspiring and a reminder of the very beginning of our country.” Rollins said. “Our revolution was fought by farmers, our Founding Fathers, like Thomas Jefferson and George Washington. The backbone of the great American experiment is this community.”

Thank you @topproducermag for hosting @RogerMarshallMD and me in Kansas City, Missouri, with 1,000 of the Top Producers from across the US to talk about issues like expanding trade access and cutting regulatory red tape for farmers.

Biden’s ZERO trade deals and inflationary… pic.twitter.com/ejMxKxkRMG
— Secretary Brooke Rollins (@SecRollins) February 19, 2025

Farmer Q&A
Watch and listen to what Secretary Rollins, as well as Sen. Roger Marshall of Kansas, had to say on stage at Top Producer Summit about these 7 topics:

Trade and tariffs — “ Let’s go barnstorm the world , and let’s go find some more trade partners and access [to market opportunities],” Rollins said.
Department of Government Efficiency (DOGE) efforts and modernizing USDA — “DOGE is a very valid and important effort across all government. The stories of waste and abuse were really just, not USDA specific but across government, beginning,” Rollins said.
Federal programs, such as CSP and EQIP — “Our commitment is that if there have been commitments made, those will be honored. Getting our arms around all of that right now is really, really, important. Again, going back to the President’s heart and commitment to our farmers, I feel confident we will be able to solve any issues that are in front of our ag community, that are potentially being compromised by the DOGE effort, while at the same time recognizing how very, very important it is,” Rollins said.
Future of USDA — “There’s no question USDA needs some modernization. I’m just beginning to lean into that as well,” Rollins said. USDA has 106,000 employees and 29 departments. “The Secretary is taking over a department where only 6% of the [D.C.] people work in the office,” Marshall added.
Renewable fuels — Prior to President Trump’s first term, he was “the first major candidate to support biofuels, and I think that carried him through Iowa in many ways. … We’ve got E15 year-round. I think that gives us some certainty as well. … The President is supporting that. I think we’re trying to figure out how to save 45Z, but we can’t let China benefit from it. Right now, China is benefiting more from [45Z] than my farmers and ranchers are, so we’ve got to fix that,” Marshall says.
Immigration policies and availability of long-term labor — “I have a full-bodied understanding of the challenges within the labor market, and I believe the President does too. … I believe that we will very soon be talking about it again. Clearly, the H-2A program needs significant reform, and Lori Chavez-DeRemer, she’s going through the [confirmation] process right now. … Hopefully she’ll get her vote very soon. We’ve got a lot of work to do,” Rollins said.
Trump’s cabinet members — “Our cabinet is comprised of people that have been working together and have been friends and colleagues for years, with a few exceptions. Bobby Kennedy is a new friend, but Lee Zeldin and I worked together in America First Works and America First Policy Institute for the last almost four years, Linda McMahon in education and John Brooks — these are our people,” Rollins said.

BREAKING: USDA Secretary Brooke Rollins and Sen. Roger Marshall to Join Farmers At Top Producer Summit

Sun, 16 Feb 2025 21:24:22 GMT

Secretary of Agriculture Brooke Rollins and Sen. Roger Marshall of Kansas will speak Tuesday morning at this week’s Top Producer Summit in Kansas City. The event is among the secretary’s first public appearances since being confirmed Feb. 13 . The fireside chat will cover key topics driving the future of agriculture.

A one-day pass to the event is available to give the agriculture industry a chance to hear Secretary Rollins share her vision for U.S. agriculture. Advanced registration is required due to security protocols. Register now with discount code ONEDAY to receive the special rate.

Secretary Rollins, originally from Glen Rose, Texas, serves as the 33rd Secretary of Agriculture. Most recently, she was founder, president and CEO of the America First Policy Institute. During President Donald Trump’s first administration, she was the director of the Domestic Policy Council and assistant to the President for Strategic Initiatives in the White House. She also previously served as director of the Office of American Innovation.

Sen. Marshall is a physician and U.S. Senator for Kansas. As a fifth-generation farmer from Butler County, Sen. Marshall became the first in his family to attend college. In the Senate, he serves on the Committee on Agriculture, Nutrition, and Forestry. He is the chairman of the Subcommittee on Conservation, Climate, Forestry, and Natural Resources and a member of the Subcommittee on Food and Nutrition, Specialty Crops, Organics, and Research.

Tickets are still available to attend the entire Top Producer Summit , which is agriculture’s premier educational and networking event for forward-thinking farmers and ranchers. The event will bring producers of nearly a dozen commodities together at the Loews Kansas City Hotel to share business opportunities and ideas for taking their operations to the next level.

In addition to the fireside chat with Secretary Rollins and Sen. Marshall, the agenda includes:

The Future of Farming with Byron Reese, futurist, technologist and entrepreneur
Conquer Decision Paralysis with Rena Striegel, Transition Point Business Advisors
How Income Taxes May Change Due To The Election with CPA Paul Neiffer
Land Diversification: What to Know Before Exploring Renewable Energy and Conservation Opportunities with Quint Shambaugh, Pinion
What’s Ahead for Farm Input Pricing with Sam Taylor, Rabo AgriFinance
What to Watch With the Weather in 2025 with Eric Snodgrass, Principal Atmospheric Scientist, Conduit Ag
Global Fertilizer Market Overview: What It Means At Your Farm Gate with Josh Linville, StoneX

Some of the nation’s most outstanding farm operations will be recognized, including winners of the 2025 Top Producer of the Year award , the 2025 Women in Ag award and the 2025 Next Gen award .

How Do You Know When Agriculture Is In A Recession?

Wed, 04 Sep 2024 22:03:48 GMT

Agriculture can sometimes act as a buffer during broader economic recessions, as demand for essential food items tends to remain relatively stable. However, when multiple indicators align, it can signal a recession in the agricultural sector.

According to analysts and economists, pay particular attention to the following:

Declining farm income. A significant drop in net farm income is a major sign. For example, USDA forecasts another major decline in farm income for 2024, on top of the big decline in 2023. That would be the largest ever two-year decline.
Sharply declining commodity prices. Weak prices for major crops and livestock products can indicate economic trouble for farmers. Crop prices have seen sharply declining prices, with the meat sector showing continued strength.
Elevated input prices costs. When input costs such as fertilizer, fuel and labor remain elevated while commodity prices fall, it squeezes farm profitability.
Reduced agricultural exports. Slowing exports and a growing trade deficit in agriculture can signal economic challenges. USDA forecasts the third straight year of a U.S. ag trade deficit , with the fiscal year 2025 at $42.5 billion.
Debt vs. cash flow. Increasing farm debt relative to cash flow combined with higher borrowing costs due to interest rate increases can strain farm finances.
Weakening credit conditions. Lower repayment rates on farm loans and increased loan renewals/extensions can indicate financial stress.
Declining demand for agricultural products. Reduced consumer spending on discretionary food items during broader economic recessions can impact certain agricultural sectors.
Falling farmland values. Higher interest rates and lower farm profitability can lead to downward pressure on land prices .
Increased inventory levels. Growing stockpiles of crops and livestock products can spur further price declines.
Widespread financial stress. When a large number of farmers across different regions and commodity sectors experience financial difficulties simultaneously it can point to an industry-wide recession.

Your Next Read: More Than 50% of Ag Economists Now Think the U.S. Ag Economy is Already In a Recession

Fraud Alert: Don’t Fall Victim to These Common Schemes

Tue, 02 Jan 2024 20:38:10 GMT

Farmers routinely handle high-dollar transactions — and the nature of the payments, often through unsecure methods, leaves them susceptible to foul play.

Those unsecure methods include mailing personal checks and buying parts from an unknown online vendor. However, one of the biggest fraud trends Angela Lewis, deposit control manager at Southern Bank in Chillicothe, Mo., is seeing involves how many operations handle employee payroll.

“We see employees commit fraud, especially through written checks from employers,” Lewis says. “Employees will steal the account number and routing number off the bottom of checks and create fake checks.”

Mail fraud and check washing is another tactic that can quickly drain thousands of dollars from an account.

“If you have mailed a check that was paid, but the recipient never received it, you may have been a victim of check washing. In fact, check washing is the No. 1 form of fraud we are seeing with our business customers right now,” Lewis says.

Check washing typically involves a check being stolen from a mailbox and then a scammer “washes” the check in chemicals to remove the ink and/or uses a copier to print fake copies of the check. Other criminals can then purchase the fake checks and deposit them.

To protect your operation from scammers, Lewis shares these tips:

Use online banking. “As a business, you should enroll in and use online banking daily to review copies of all checks issued to ensure they were not altered,” she says. “Also make sure to review the backs of checks to verify the endorsement information matches your intended payee.”
Follow up. If you are going to mail checks, make it a habit to follow up with the people or businesses to make sure they receive it.
Switch to online payment options. Your financial institution likely offers e-checks, ACH automatic drafts or other online bill pay options.
Confirm the goods. When it comes to making purchases from an unknown source, such as on Facebook Marketplace or Craigslist, Lewis shares it’s a good idea to meet the seller in person and verify the goods prior to sending the money. “Newer scams we’re seeing involve the use of payment apps, such as Cash App, Paypal, Venmo and Zelle, and social engineering to convince people to send money for fraudulent goods or services or to send money to fraudulent accounts,” Lewis says. “Once the funds have been sent, they are difficult to recover.”

If you do fall victim to a scam, there are a number of organizations, in addition to your bank, available to help. For example, several states have a division within their department of agriculture dedicated to this type of crime.

According to the Tennessee Department of Agriculture’s public information officer Kim Doddridge, the organization’s agriculture crimes unit is responsible for tracking and investigating crimes in Tennessee related to agriculture, forestry and wildland arson, animal health and agribusinesses. While many of their cases are related to livestock cruelty, arson and equipment theft, Doddridge shares they have dealt with reports of cattle purchasing scams, cattle selling scams and email scams.

In addition, USDA’s Office of the Inspector General has a fraud hotline to report violations of laws and regulations in regard to USDA programs. These can be reported anonymously either online or by phone.

Top 5 Risks on Your Operation Explained

Tue, 21 Nov 2023 17:15:17 GMT

How well prepared is your operation to manage risk?

For ag operations, oftentimes successful risk management can make the difference between an operation that runs like a well-oiled machine versus one that seems to constantly be swimming just to stay above water.

“Depending on how your operation runs and where you leverage your pain points, then we can help you put together a risk management plan to make sure that you’re not going to have big effects from your risk areas,” says Ross Bronson, an ag risk consultant with Redd Summit Advisors, in Kansas State University Beef Cattle Institute Cattle Chat podcast .

Additionally, well-managed risks could make the difference in an operation surviving into the next generation.

Here’s a look at the top five risks found in ag operations:

Legal—such as liability, contractual obligations—This includes typical operational tasks, such as delivery of products, as well as an accident that may have occurred on your operation. In severe cases, this risk factor will be best managed alongside a lawyer who is familiar with agriculture, trustworthy and has your operation’s best interest in mind.

Human—such as employee satisfaction, including family members—Though often overlooked, this risk is an important piece of the puzzle. Is the environment of the operation safe, mentally sound and healthy for all involved? Are family members working on the operation treated fairly compared to other employees?

As Robert Larson, DVM, professor of food animal production medicine at KSU says, “If you actually go back and see why family farms and ranches don’t survive another generation, a lot of times it was the human side—family relationship fractures and problems with your landlord and things like that.”

Financial—such as record keeping, as well as taxes, bills and debt—Is your operation actually profitable? Knowing where your operation stands financially through the use of cash-flow statements and balance sheets can be helpful.

Production—utilizing resources to create a sellable return—Looking at your operation, ensure assets are being managed properly and are performing adequately. What is the operation’s average mortality rate of livestock? Are your current bushels per acre comparable to a 10-year average? What changes could be made to increase profit on the operation? Take time to analyze your production practices to ensure your operation returns the most per acre or asset.

Marketing—strategic planning in covering risk of marketable products—Is your current marketing plan providing the best return? Are there value-added programs that could increase profit without increasing labor, time and resources? Forward contracting harvested grain, contracting feed prices at profitable levels and hedging can be ways to manage risks in a commodity-based market.

Which of these areas does your operation do well? Where can your operation improve?

Find a trusted advisor to help you make changes to your operation, if needed, to better manage risk and ensure success in the generations to come.

Is Risk Management A Necessity Again?

Tue, 03 Oct 2023 15:53:14 GMT

The necessity for managing price risk in the ag sector, as well as non-ag, is likely coming into vogue again. The two-year bull market for grains ended spring 2022 with collapses from lofty levels in $8 corn, soybeans over $17 and Chicago wheat over $13.

The supply-driven bull markets that began in September 2020 for grains have seen gains reset back to those levels. Soybeans have reset 50% of that price move.
The profit-landscape of U.S. agriculture has changed, putting a new emphasis on risk management. Twelve years at 2% inflation and interest rates near zero were an outlier as the chart below reveals.

I lived through the 1980s, when inflation and interest rates were much higher — as did many of those in government and the Fed. While interest rates are not at 1980s levels, capital expenditures for land and machinery are much higher. Return on investment (ROI) requires a new perspective for both depreciable (machinery) and non-depreciable (land) assets.

The Fed is allowing risk back into the marketplace. Gone are the days of the Central Bank “we got your back zero interest policy (ZIRP),” an environment where investing in just about anything yielded more than money in the bank and the cost of money had only honorable mention on a P/L statement. The environment of zero-rates led to popular perspectives of “there is no alternative (TINA) but to buy dips” in assets that returned anything better than zero or money in the bank.

Cash Is King Again

Profit margins will be under attack and enterprises allowed to fail. Banks will let non-performing assets sell at market-clearing levels. The question is whether U.S. agriculture has become too big to be allowed to fail.

This new environment is global. European and socialistic countries face the same issue, while emerging nations will carry new risk of uncertainty as money/investing goes to countries with a stable government, military and economy. The U.S. meets the criteria suggesting a stronger dollar will make our products less competitive. It becomes not who can produce the cheapest, but who will sell the cheapest.

(Farm Journal)

It’s likely managing a slimmer margin in production agriculture will be closer to the 1980s than the 2010s. The danger is in new participants in our ag economy who view the last 20+ years as normal. Worse yet, participants for whom those years were the basis for their entire careers.

The massive infusion of government money the past few years created a sense of apathy toward managing price risk. As a result, the need for risk management might have been grossly underestimated. Our ag economy is also underestimating risk management’s importance in the new environment of positive real interest rates.

Unintended Consequences

This isn’t my first rodeo. I’ve seen a scenario like this before with land and machinery. Investing in land that returned 2% was and is better than zero return on money in the bank. Land has doubled or tripled the past 20 years under the “TINA” scenario. But a 3% to 4% return on $5,000 per acre of land and a 5% return on $15,000 per acre of land are quite different. A $750 per acre rent isn’t practical nor is a $400 rent under $4 corn. There lies an alternative investment vehicle (ROI) now for new money and old money currently invested, especially if normalizing interest rates is the new norm.

The same is true for depreciable assets. Immediate write-offs have been touted by the capital goods industry as economically beneficial, but there is a price to pay if the asset is depreciated fully but not paid for. It takes after-tax income to make a capital payment and depreciation is the vehicle allowing that to happen. Whether it’s land, a home or unwise tax planning, there are consequences. The Fed is sending a message: There are future intended consequences. The future is here.

Are You Exposed? Assess Your Farm’s Insurance Coverage

Wed, 26 Jul 2023 20:04:06 GMT

As your farm grows, so do your liabilities. Proper farm insurance, which can include property insurance, general liability insurance and workers compensation, provide large operations with protection and peace of mind.

“Large farmers tend to neglect the need for proper umbrella coverage limits, especially when it comes to the increasing net worth of the farm,” says Jay LeFevre, agent, First Gabrielson Insurance Agency.

Failure to purchase sufficient coverage for business size and activities can have severe consequences for the financial health of the farm, explains Ray Massey, University of Missouri Extension economist. As such, it is important to know what your policy covers, but it’s just as important to know what it does not cover.

“It is critically important to review coverage at least on an annual basis,” adds Amy Fairchild, commercial account manager, ProValue Insurance.

As you review your policies, make a point to add recording keeping to your process. “Anything they can do to provide records, from written safety protocols to detailed spraying records to employee meeting notes to employee training reports will be a big help, says Stacy Walton, director of farm casualty for Grinnell Mutual.

LeFevre, Massey, Fairchild and Walton suggest farmers sit down with their insurance providers and ask the following questions.

Assets

With higher construction costs, are my property and assets undervalued?
If I need to totally rebuild a grain bin system or finishing barn, will my policy cover it?
Do I need additional coverage for tools and technologies such as drones?

Diversified Operations

My operation includes many entities (crop production, trucking, etc.), does my umbrella policy cover all of those at a high enough level?
Do I need any endorsements, additions or riders to policies to cover my operation? (These are common for activities such as custom farm work, spraying chemicals, snow removal, agritourism or food sales.)
I have a livestock production contract. Does my farm liability policy offer enough coverage?

Employees

I have a large team of employees. Do I need a crime policy or an employment practices liability policy in case of wrongful termination?
To what extent will my policy protect me from a large liability exposure, such as an employee injury?
Who exactly does my policy cover? Besides me (the policyholder), does it include relatives, all employees (full-time, short-term, seasonal) and independent contractors?

Access a guide from the University of Missouri to help you further review your farm liability insurance policy.

Pick Your Power: Learn How Powers of Appointment Work In Estate Planning

Fri, 21 Jul 2023 18:18:42 GMT

When you draft your estate plan, your plans and wishes should reflect what you want if you died tomorrow. But, of course, after you die, circumstances could change — and your family might wish you’d had a different plan.

While your plan can rule your farm from the grave to a certain extent, it should be flexible, and you can take a few key steps in your estate plan to accomplish this.

In your will or trust documents, you name a power of appointment. This means you grant power to an individual to name recipients of all or a portion of your money and property in the future.

“This power can be wide-ranging or restricted,” says Roger McEowen, agricultural tax expert at Washburn University School of Law. “The two categories are general power of appointment or special power of appointment.”

Here are the differences:

General power of appointment provides the donee/holder broad power to give away the decedent‘s property to anyone, without restrictions.
Special power of appointment gives the donee/holder power to give the decedent’s assets to a select group of individuals or groups.

FOCUS ON FLEXIBILITY

The key difference in the two powers is the level of flexibility, says Polly Dobbs, attorney and owner of Dobbs Legal Group in Peru, Ind.

General power of appointment can have a time and a place in some documents, Dobbs says: “They are really for the Ward and June Cleavers of the world that have only been married to each other; they want to keep things super simple.”

General powers cause the assets subject to appointment to be included in the power holder’s estate for taxes.

Whereas a special power can be broad or narrow, within a person’s comfort level and does not cause inclusion in the power holder’s estate.

“For instance, if your spouse lives for a few more decades and sees who’s on good paths or who’s addicted to meth, the spouse could have a special power of appointment to make adjustments to the ultimate plan,” she says.

BE SPECIFIC

Typically, Dobbs says, a special power is limited to descendants. The power holder can pass your assets to children or grandchildren at different ages or keep them in a continued trust or even pass to a charity. This gives your plan the ability to reflect new law changes or fluctuating asset values.

“If the laws change and it turns out the kids are rich in their own right, where it would be terrible to dump a bunch of acres on their balance sheet, a special power can choose to keep them in the trust for the benefit of the super-rich child without exacerbating their own estate tax problem,” Dobbs says.

If you chose a special power of appointment, McEowen suggests you be specific in the drafting language and choose the donee carefully.

Sara Schafer uses her Missouri farm roots to cover crop management, business trends, farmland and more.

Use Portability to Avoid a Potential Multi-Million Dollar Estate Mistake

Thu, 20 Jul 2023 18:37:49 GMT

A common financial mistake married farm couples make occurs when the first spouse dies, and the surviving spouse fails to “elect portability.”

It’s a process by which any unused federal gift or estate tax exemption can be transferred from the deceased spouse to the surviving spouse, according to Polly Dobbs, founding partner of Dobbs & Folz, LLC Peru, Ind.

What portability helps the surviving spouse achieve, ultimately, is to put the farm assets in the best position to be transferred upon his/her death, to the next generation without estate taxes being owed.

For 2023, each spouse has a $12.92 million exemption from federal gift and estate taxes, but that amount is set to “sunset” to around $6.6 million each in 2026. Electing portability can lock in that high exemption if a spouse dies before the sunset date.

Straightforward Process
To elect portability, the surviving spouse must file Form 706 Federal Estate Tax Return with the IRS.

“It’s not something that happens automatically, and it’s a crucial action to take – even if all the assets were jointly owned and no taxes are owed when the first spouse dies,” Dobbs says.

“Many certified public accountants (CPAs) and lawyers are unaware of portability, or don’t believe it’s worth checking into, but it is,” she adds. In fact, she tells advisers for their own protection to get it in writing if a surviving spouse declines to elect portability.

Portability is a recent process available to married farming couples, which is why many CPAs and lawyers are not aware of it.

One Form To Complete
IRS has simplified the process to elect portability in recent years.

“A certified public accountant or a lawyer can help the surviving spouse use shortcuts when filing a Form 706 just to elect portability, like skipping appraisals and valuations. The value of the assets may be estimated only to the nearest quarter million dollars of value at the first spouse’s death,” Dobbs says.

Form 706 generally must be submitted to the IRS within nine months of the first spouse’s death. That deadline can be extended automatically with Form 4768, however, for an additional six months.

Additional Time Available
If a surviving spouse missed the initial deadlines for filing, they can still elect portability up to five years from the date of their spouse’s death by invoking “Relief under Revenue Procedure 2022-32,” Dobbs notes.

Dobbs estimates the costs to have an adviser’s help to complete the form and submit the paperwork will total less than $3,000, depending on the assets that need to be reported.

“The costs incurred are minimal when compared to the millions of dollars of estate taxes that could be saved,” she says.

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What is Livestock Risk Protection (LRP)?

Wed, 28 Jun 2023 19:31:34 GMT

While many tools for managing risk exist for livestock producers today, livestock risk protection (LRP) may be a valuable option for producers no matter how large or small the operation.

What is LRP?

Livestock risk protection insurance serves as a price insurance policy developed as a price risk management tool for feeder cattle, fed cattle and swine, and is administered by the USDA Risk Management Agency (RMA), according to a University of Tennessee publication , written by Andrew Griffith, assistant professor and livestock extension economist.

LRP is used to establish a floor selling price and protects producers against catastrophic price declines, such as those at may occur due to a disease outbreak, drought, pandemics or other industry disruptions. However, LRP allows producers to benefit from price increases.

This program does not protect against any type of production risk, such as mortality, condemnation, physical damage, disease, individual marketing decisions, local price aberrations or any other cause of loss, Griffith notes.

“LRP is not designed to enhance livestock producers’ profits, nor does it guarantee a cash price for the cattle,” notes Griffith. “LRP strictly protects against declines in a regional/national cash price index.”

Additionally, LRP provides flexibility for producers in the timing of purchase, length of coverage, number of head covered, target weight of livestock at the end of coverage and the coverage price level, Griffiths adds. Compared to using futures and options as a risk management tool, producers are not subject to margin calls or quantity minimums.

How Do I Sign Up for LRP?

Signing up for LRP requires two forms: the policy/application and a specific coverage endorsement (SCE).
The policy/application is first completed with the provider prior to purchasing LRP. Local agents can be found using USDA’s RMA agent locator site.

When deciding on a specific coverage environment, there are several options to consider.

LRP policies begin on the effective date of insurance purchase and run for the selected number of weeks (13, 17, 21, 26, 30, 34, 39, 43, 47 and 52), completing on the end date. The insurance period for a producer should be the number of weeks closest to when the livestock will be marketed.

Additionally, LRP coverage levels can range from 70% to 100% of the expected ending price (approximately the futures price for the given time period), and is calculated based on the chosen coverage price relative to the expected ending value, Griffith explains.

However, he adds, “It is important to note not all coverage levels or all weeks of insurance periods are offered each day. Therefore, a policy meeting the goals of the operation may not be available today, but such a policy may be offered at a future date.”

Requirements of LRP

To insure livestock using LRP, the livestock must be owned by the producer or family member, and ownership must be maintained until 60 days prior to the SCE end date for the insurance to maintain its value. Livestock do not have to be sold to receive an indemnity payment, as there is no restriction on livestock being marketed after the end date of the SCE.

“Any portion of insured livestock disposed of prior to the last 60 days of coverage results in that portion of the coverage terminating with no indemnity being paid for neither that portion nor any of the premium being refunded,” Griffith explains.

How are LRP Insurance Premiums Figured?

Premiums are figured using the expected ending value of the livestock (near the futures price for the particular end date, derived from the futures market) and a coverage price level (percentages of the expected ending value, chosen by the producer).

Then, the expected ending value is compared to the actual ending value (cash price for the commodity on the end date) to determine if an indemnity payment is to be received by the producer. Specifically, the actual ending value is based on the weighted average price as defined in each SCE.

LRP insurance is offered under the Federal crop insurance programs and premiums are subsidized by the federal government. RMA subsidizes 35% to 55% of the premium cost of a SCE based on the coverage level chosen. Additionally, premiums of LRP insurance are not collected until the end date.

(Farm Journal)

When Does LRP Pay?

“If, on the end date of the policy, the regional/national cash price average (not the producer’s cash price) is below the insured coverage price, the LRP insurance pays an indemnity to make up the difference,” explains Farm Credit Services of America.

While LRP is a price risk management tool available to livestock producers to protect against major financial losses due to catastrophic price declines, it is not meant to increase producer profits. It’s to reduce losses when prices decline and save the producer from losing the farm, Griffith says.

If considering implementing LRP as a risk management tool, find a local agent to discuss more details and determine which SCE is best for your operation.

For more information, visit these USDA RMA provided Fact Sheets:
Livestock Risk Protection Feeder Cattle
Livestock Risk Protection Fed Cattle
Livestock Risk Protection Swine

Navigating the Challenges of the Hog Market in 2023: Supply, Demand and Price Dynamics

Thu, 22 Jun 2023 15:30:36 GMT

How’s the best way to describe the current hog market, including supply and consumer demand? It’s complicated.

Experts Dave Delaney and Billy Polovin with Partners for Production Agricultures by Ever.ag, confirmed the complexity of the hog market and dissect the challenges seen in 2023 in a recent AgriTalk conversation.

“When is the supply going to catch up?,” Polovin says. “We’ve been running a lot larger as far as bills go than anyone, I think, has expected for at least the first five months of this year.”

The demand right now is not terrible, he adds, it’s just worse than 2021 and 2022. But when you put that on top of supply, it all turns into the scenario that we’ve seen with prices.

It could be a matter of the fact that we have reverted to a more normal demand, with a little bit better production, Polovin explains.

However, as host Chip Flory notes, we can’t single out pork. “It’s beef. It’s poultry. It’s the consumers pocketbook and the inability to spend as much on protein as what they have in the past.”

Recalling a recent conversation, Delaney says, “We’re starting to see a shift. Sometimes we’ll see shifts from beef to pork to chicken within the protein case, but right now we’re seeing them shift out of the protein case to the pasta aisle, and that’s driven by economics.”

Polovin adds that while this year’s demand is not that much different that what is considered average, the supply issue should be the focus.

Also on AgriTalk, Flory notes, “The [daily] slaughter levels just continue to come in bigger than what the trade was expecting because USDA underestimated the number of slaughter hogs market hogs in the system back to back and maybe back to back to back.”

Don Roose, president of U.S. Commodities, Inc., agrees there is a challenge in hog inventory reporting with only four reports each year. Additionally, he says the liquidation phase has hit the industry, which will impact inventory.

“I don’t ever recall where we see the liquidation phase, which we’re in and usually affects some medium and small guys, but we’ve had the large guys liquidating, which was really a shock for me,” Roose adds. “I don’t know if it was just the economics of it, or Prop 12. I think it was a little bit of everything. But you know, what we’re seeing from the producers is that they’re trying to hunker down. Look at the future, looks like we have better times ahead with liquidation.”

Along with liquidation, Delaney believes producers are going to drop their weights drastically to try to lower costs.

Hog Markets and Risk Management

Considering the structure of the futures markets, Polovin says, “The way the market was holding on to a premium for such a long time, it was trying to predict that things were going to be better ahead. As fundamentalists, we try and predict what the future actually is going to be and how we can use that futures structure to in the idea of risk management.”

In the wake of some decisions, including California’s Proposition 12, the market released the premiums, he adds.

“Now, we have to start here and look at the futures market and say, ‘what’s the next move,’ ‘where are the fundamentals heading,’ and ‘are there going to be a lot more weaknesses coming at us?’ If so, the futures are still giving you opportunity. And we have to see, ‘does that opportunity make sense for us to be in the futures market?’ What are the other tools that we can use to say, we need to have some protection to the downside? And I think that’s where we’re at right now with the futures market,” Polovin explains.

Polovin notes how the decision making process is extremely important when numbers get tight. Depending on the situation, establishing floor coverage or other insurance-type coverage that leaves the producer with very little upside risk may be a great option, he says.

Read More:

Taiwan Should Be a Better Market for U.S. Pork, NPPC Says

BBQ Secrets Revealed: Sons of Butchers Opens Up About World Pork Expo Favorites

Time to Shake Things Up in the Meat Business – Part 1

Looking at the Loin Differently

Want to Grow Your Farm? Ask These 10 Questions First

Wed, 17 May 2023 19:57:51 GMT

More than 50% of farmers intend to grow their operation, based on responses in Purdue’s February 2023 Ag Economy Barometer.

(Farm Journal)

If you’re thinking about scaling your farm, Michael Langemeier, Purdue ag economist, says it’s important to first ask these questions.

1. Why should I grow my operation?

Before an operation expands, consider the vision and direction you want your farm to take.

“Are you interested in a commodity-based approach or a differentiated product strategy? Commodities will focus on cost control while products will be centered around value-added production and above-average prices for your crops,” Langemeiers says. “Start here and consider how growth impacts your direction.”

Once an approach is chosen, it’s time to decide which dominoes you want to play in the expansion game.

2. What ways I can grow my farm?

There are many ways to expand an operation: acquire land, new equipment and technology, upgrade facilities, etc. However, Langemeier says some producers need to think outside the box.

“Don’t just think about what you currently do or have always done. This step is a good time to do some soul searching to consider where you want to be in five to 10 years. Do you want to be the same enterprise, or do you want to make changes?”

Langemeier says this soul-searching step is especially important when someone is coming back to the farm.

“We’re seeing that a lot of students who come from farms want to go back, and we have to look into whether there are opportunities there or not,” Langemeier says. “There’s always new interest and ideas that come with the transition back to the farm.”

After establishing how you want to grow, consider your growth approach.

3. What should my growth approach look like?

A strengths, weaknesses, opportunities and threats (SWOT) analysis is a common growth approach in business. Langemeier says another way to think about SWOT is in terms of internal and external analysis.

“Internal analysis means looking at key resources and capabilities of a team or operation,” Langemeier says. “Does someone possess a unique skill you can maximize? Take advantage of those unique skillsets.”

Internal analysis mainly centers around strengths, but weaknesses play a role here, too. Are there areas in your operation that need professional development? Langemeier says this is the time to work on both.

External analysis, on the other hand, examines economic and market trends.

“The easiest example is in livestock; raising pasture pork, poultry or beef, or offering direct meat from a producer rather than a grocery store, are all growing trends,” Langemeier says. “If you have those opportunities, think about how they might fit into your operation.”

While there’s more risk in external factors, Langemeier says “the risk can be worth the reward” for producers who understand what trends they can support.

4. How do I evaluate my farm’s growth ventures?

Now that the growth options are laid out, how does a producer choose which option to pursue?
These eight criteria can help:
• Strategic fit
• Expected returns
• Risk
• Capital required
• Cost and ease of entry and exit
• Value creation
• Managerial requirements
• Portfolio fit

Strategic fit is one of the biggest points to consider, according to Langemeier.

“A few years ago, many growers were interested in hemp production. I would ask them if hemp would require new machinery and if they were used to dealing with contracts,” he says. “If the answer was yes and no, then it probably wasn’t going to be a good fit.”

He says ease of entry and exit is the second criteria he points farmers to.

“If your farm were to pursue a new venture and it fails, would it mean you could lose the whole farm? Because there will be things that fail,” Langemeier says.

If a specific venture requires a lot of capital, he says it is pivotal to explore how the investment could affect balance sheets in the long run.

5. What skills are needed to grow, especially in people returning to the farm?

Taking stock of employees’ skillsets, this is the part where growers consider the strengths and weaknesses of human capital currently on the farm and those soon returning to it.

“When someone’s thinking about coming back to the farm, that’s the time to assess the skills that are currently needed, and then try to encourage the younger person to garner some of those skills,” Langemeier says. “We might have the skills to expand our operation, but do we have the skills to start a new venture in a different enterprise? Think about it from all angles.”

6. How do I finance?

Are you willing to take on debt to expand? If so, how much debt are you willing to take on? Langemeier suggests looking at debt as enabling you to take advantage of an opportunity, not as a negative.

“If you have 2,000 acres and are thinking about adding 1,000 acres, even if that’s leased ground, you’re still going to need more machinery and people. You probably don’t have that retained earnings, so you’re going to take on debt,” he says. “As long as you’re making a profit on those additional acres, and you can make the debt payment, it’s not a problem.”

Langemeier warns that a small profit margin can quickly turn into an issue when a venture flops. He advises producers keep a somewhat equal balance of debt and projected venture profits.

7. What business models do I use to grow?

Expanding internal growth with retained earnings and debt is a typical business model for most operations, according to Langemeier. He says there’s a new trend in this arena.

“I’ve seen a lot of production ag cases recently where a farm acquires assets from a retiring farm,” he says. “Not only do they farm the land, but they also buy the machinery, the bins and the whole farm. This really works for some operations.”

Another model that’s becoming somewhat common is a joint venture. Agribusinesses use this model frequently, but Langemeier says more mid-sized operations are leaning toward this option.

“One of the advantages of joint-venture contract turkey, laying or finishing operations, especially in the Corn Belt, is that there’s a partner with you,” Langemeier says. “It allows us to grow effectively.”

Finding a partner to go-in on the venture isn’t always easy. However, Langemeier says producers often look in the wrong places.

“Some farmers say they don’t have any outside investors, so I tell them to think about family or non-farm heirs. Pitch it as a way of investing in your business so that you don’t have to make them partners or an operating entity,” he says. “Land, for instance, could be an outstanding source of outside equity with non-farm heirs.”

8. How would an expansion impact my current operation?

When considering growth options, it’s vital to your growth success to consider how each option will impact the farm’s balance sheet and income statement. Langemeier suggests running three projected scenarios — worst, most likely and best case — through a spreadsheet or a software, like the University of Minnesota’s FINPACK system .

If you choose to run the projections by hand, this is the process Langemeier suggests:

a. Impacts on cash flow and balance sheet

“A growth change will impact both — don’t just look at cash flow,” he says.

b. Debt versus equity

“Maybe the change will reduce your liquidity and increase your solvency too much,” he says. “If that’s the case, you can’t pursue that particular venture.”

c. Time management

“There are only so many hours in the day, and some of us sometimes work too much,” Langemeier says. “Say you’re going from conventional to organic, it’s going to be management intensive. Be realistic about what you and your team can handle.”

9. What challenges would an expansion create?

Construction delays, cash flow shortages, depleted working capital, short-term inefficiencies and management bottlenecks are often at play when starting a new venture, according to Langemeier. He advises producers to be proactive.

“If a venture creates massive cash flow shortages and eats into your working capital, you need to have a plan to deal with those issues. If you don’t, it will lead you into other challenges, like inefficiencies, and you’ll end up with a failed venture,” he says. “Make sure you have a contingency plan.”

10. What is my sustainable growth rate?

Calculating a sustainable growth rate means saying what a growth rate would be if retained earnings is the only money used, and then compare that to what a growth rate would be if only debt was used. Langemeier says this equation has other variables that often go unchecked.

In the debt scenario, he says you have to think about the downside of debt — the chance of going bankrupt and variability.

“Even if your operating cash flow is low, the lender still wants his payments,” Langmeier says. “You have to think about the coping strategies to make those debt payments even when corn is at $5, compared to $6.50. Make sure you run all the numbers imaginable.”

The Main First Step When Considering Expansion

With all 10 points in mind, Langemeier says the first stage of growth shouldn’t include producers running to formulate a 50-page business plan. He says step one starts with a conversation.

“You should be having regular farm and family meetings, at least once a year, to brainstorm with your employees and family members about the things you could do differently on-farm, and allot time to consider continued improvement, opportunities and threats,” he says.

According to Langemeier, these meetings will offer more than exploring growth; they will ensure farm, family and employee survival.

Senate Ag Leaders Ask for More Farm Bill Funds

Thu, 06 Apr 2023 21:52:24 GMT

Senate Ag Committee leaders penned a letter this week to the Senate Budget Committee, requesting additional funds to complete the 2023 farm bill. Chairwoman Debbie Stabenow (D-Mich.) and Ranking Member John Boozman (R-Ar.) said drawing on reserves “to strengthen farm and food safety nets” became clear in farm bill hearings.

Pulling from reserve funds will help put an end to ad hoc disaster assistance, according to Stabenow and Boozman.

“Since 2018, the Federal Government has approved more than $90 billion in ad hoc assistance for farmers and ranchers in response to Chinese tariffs on U.S. agricultural exports, the pandemic, and increasingly unpredictable climate-related disasters,” the letter says. “A commitment to additional financial resources for the farm bill will help to transition our farm and food supplies away from ad hoc support.”

Risk Management in the Farm Bill

Stabenow and Boozman also mentioned their concern in the status of the Congressional Budget Office’s (CBO) ag market data that is needed to quantify risk management in a farm bill.

“CBO currently projects 10-year average commodity prices that are well below price projections from leading subject matter experts at the USDA and demonstrate a much faster decline toward a long-run average price,” the committee members wrote. “As a result, estimates of changes to risk management tools in the farm bill will likely reflect greater increases in direct spending than if CBO commodity price projections and trajectories were more in line with those of leading industry experts.

The CBO data was to have been released over one year ago. To help expedite the process, the Senators requested the Budget Committee supports them in working with the CBO to secure “accurate” information in a timely manner.

Farm Bill Spending Assurances

The letter also urges no funding cuts for the panel to write the next farm bill.

“As the Committee on the Budget considers federal spending for FY 2024, we ask that you help us maintain certainty for agriculture producers, families, and rural communities, and propose no cuts to food and agriculture spending,” the letter said.

What Do Americans Want to See in the 2023 Farm Bill?

Wed, 29 Mar 2023 20:24:36 GMT

American Farm Bureau Federation released a survey on Wednesday, which shows the majority of respondents agree that nutrition and risk management should be top funding priorities in the farm bill.

Historically, the nutrition title, including Supplemental Nutrition Assistance Funding (SNAP), takes the majority of the farm bill cake, as was seen in 2018 when nutrition made up 76% of the budget.

(Farm Journal)

The Congressional Budget Office, in its 10-year Budget and Economic Outlook , raised the cost estimate for SNAP by $93 billion over the next decade. Sen. Joni Ernst (R-IA) says this is where the greatest farm bill debate will take place.

“If you’re an able-bodied, single male with no children, then you should certainly be working and providing for yourself,” Ernst says. “We have to make sure those funds aren’t abused at the expense of the taxpayer while making sure those needy families do get the support they need.”

While nutrition programs have taken focus, inflation is top-of-mind for Americans.

Addressing Inflation

According to survey results, 86% of respondents are concerned about food inflation. And the issue didn’t go unnoticed by Rep. Austin Scott (R-Ga.) in a recent House Ag Committee hearing .

“I think everybody in America that is watching this is smart enough to recognize the volume of food, as we’ve seen with eggs, there are supply-and-demand issues there,” Scott said to Tom Vilsack, USDA secretary. “No matter how much you give somebody in SNAP benefits, the cost of groceries continues to go up…”

Scott attributes the inflation to “bad” policy, which leads to less food availability. He says food security starts in the farm safety net and program titles, not nutrition.

Risk Management

So, where will risk management fall in the farm bill debate if food insecurity is America’s second-largest concern? Sen. Chuck Grassley (R-IA) says he’s made a point to hold space for risk conversations, particularly insurance, in hearings.

“What we need to do is make sure the crop insurance program is kept as the most useful safety net tool for the family farmers—that’s 86,000 in Iowa, and over the country as a whole about 2% of our population are involved in ag, producing the food for the other 98%,” Grassley says. “And that 2% needs consideration, considering how important they are to the livelihood of everybody else.”

But there is a chance the insurance title could be “reworked” all together, according to Kala Jenkins, Pinion ag consultant.

“I’ve heard chatter about whether we need to change the way some of these programs work today, like whole farm crop insurance programs versus the noninsured crop disaster assistance program.” she says. “Then there are also some stakeholders questioning whether we need to link insurance to conservation, while others don’t want it to be the main focus. The needle is all over the board.”

What’s at Stake

With so much uncertainty in the farm bill arena, it begs the question of whether a farm bill will be passed in 2023. And most American’s understand what those repercussions would look like, even if they aren’t involved in ag.

When questioned about whether they think a farm bill passage or delay would impact the country, their state, community family and themselves, respondents forecast the biggest impact would be on the country and the smallest impact landing on themselves.

These results may have something to do with consumer’s trust in producers. According to the survey, 89% of adults trust farmers, which has remained steady since 2019.

“Almost nine in ten adults trust farmers, which will be important as we work to inform the 260 lawmakers who weren’t in Congress when the last farm bill was written,” says Zippy Duvall, AFBF president.

Accidents Happen. Don't Lose the Farm Because of Them

Fri, 27 Jan 2023 18:04:27 GMT

It’s well after lunch, mid-afternoon at an all-day grower meeting, but the 20-plus farmers sitting on metal folding chairs arranged in a half circle are focused intently on the speaker in front of them.

“Only 50% to 60% of farmers going down the road hauling a load of hay, driving a semi with grain or some other piece of equipment are doing so legally,” Fred Whitford tells them.

He pauses momentarily, reflects on what he’s just said, then nods his head: “Yeah, I’m pretty comfortable that’s true. It doesn’t take much to be at fault; it could be as simple as driving on bald tires.”

The farmers look around at each other nervously as Whitford builds on his initial comment.

“If I don’t have grooves in my tires I can’t move water, and I can hydroplane. When I go to brake, I don’t have braking power and the truck won’t stop.…What then?”

Maybe the truck just ends up in a ditch. At the other extreme, the driver has a major accident with a motorist that causes death or life-long incapacitation.

It’s not uncommon. Data from the past decade show that while only 19 of every 100 Americans live in rural areas, more than 50% of all fatal roadway accidents take place there, according to the U.S. Department of Transportation.

It’s a heavy topic, but Whitford wades into it, intent on helping the farmers present prepare for if or when calamity strikes.

Pitfalls To Avoid
One common problem is farmers tend to have insufficient insurance, says Whitford, Clinical Engagement Professor, Botany and Plant Pathology and Director of Pesticide Programs at Purdue University.

“Say you have $2 million dollars of liability coverage, which roughly covers your net worth. One of your vehicles is involved in an accident that causes the death of a child.

The jury awards the child’s parents $5 million. Your insurance company would only be responsible for covering the first $2 million, while you would be responsible for the remaining $3 million,” he says. “That could bankrupt your business.”

Whitford brings up another common issue he sees.

“Who has their farm in an LLC?” he asks the group.

A couple of farmers raise their hands. Most are studying the floor. One mumbles that his land and equipment are in a single corporation.

“Well, sir, that’s not a good idea,” Whitford politely tells the farmer. “I can go into the corporation, get all the insurance money and then I can sell the land. I see it happen all the time.”

Whitford tells the farmer to go home and put his land in a corporation separate from his equipment. “You want to protect the one asset that brings you income,” he advises.

“This is why investing the time with an attorney is so vital.”

Whitford also encourages the group to meet with their insurance agent. “Ask them some questions, like ‘How much am I covered for? And what does that mean?’”

Insurance agents often tell Whitford that when they ask their farm clients to come in for an annual review many don’t even return their calls. “Not getting your annual insurance review is lost opportunity to protect your assets,” he says.

He acknowledges a basic insurance policy for the farm is pricey, and there’s no escaping the expense.

However, additional coverage beyond the basic policy is often available at a more palatable rate. Sometimes referred to as an umbrella policy, it provides additional protection that could literally save the farm.

“It often adds $5 million, $10 million of protection on top of your basic policy and at a discounted rate, but insurance agents often don’t bring it up because they know the odds of you buying it are slim,” Whitford says.

Talk, Listen, Act

As part of your annual meeting with your insurance agent, don’t hold back, Whitford tells the farmers in the room.

“Get your agent’s best advice, discuss all of the possible insurance options, then make the best decisions for you and your farm regarding coverage and policy limits,” he says.

While most farmers believe insurance is important, few read their policies. It’s true that an insurance policy is tedious reading, but making an effort to understand what is (and what is not) covered is important.

“After you suffer a loss, it will be too late to make any changes,” Whitford says. “Even if you don’t personally read your policy, at least develop a list of questions you want your insurance agent or attorney to answer.”

More Information Available

Fred Whitford is the author of more than 300 publications. Two of his recent ones are:

The Aftermath of a Farm Truck Crash: Lawsuits, Settlements, and Court Proceedings

Farm Truck Accidents: Considering Your Liability Management Options

Agro-Terrorism and the Food Supply Chain: This is a Different World, Rose Says

Mon, 10 Oct 2022 23:43:03 GMT

If you want to disrupt a government, disrupt the food supply.

“Agriculture is critical infrastructure,” Andrew Rose, strategic advisor to the food and agriculture supply chain, said during Farm Journal’s Farm Country Update on Sept. 28. “Three weeks without food and agriculture, and it’s over. You don’t mess with food and ag.”

Years ago, Rose was working at a large agricultural lender and decided to run a tabletop exercise as part of a teambuilding workshop simulating a ransomware attack on the company.

“Walking away from that exercise, I began thinking, is this a blind spot in the food and agriculture supply chain? Are we aware of the threats out there and the implications they can have? Not only to us as producers and processors, but to the entire critical infrastructure, and our ability to feed our population? I kept getting more questions than I got answers,” Rose said.

Since then, Rose has dedicated himself to helping the agricultural community get more prepared and understand the threats knocking at the gate.

What is Agro-Terrorism?

Agro-terrorism, or the deliberate introduction of a disease agent against livestock or into the food chain, is typically a tactic that can be used to either generate or cause mass socio-economic disruption or as a form of direct human aggression. Rose says there are a lot of definitions out there, but from his research, for a terrorist act to occur, there needs to be violence.

He said the FBI constantly hammers home the concept of sympathy versus action. Rose points out that having strong feelings about something isn’t wrong – acting on it is.

“There’s a First Amendment right to say and feel what you want to about any given subject. You can walk outside and put posters up, you can get a bullhorn, cowbells, whatever you want. As soon as you take an action, though, that’s when things change. That’s when risk and consequence come into the equation,” Rose said.

For the agriculture community in particular, it hurts when someone stands outside of your property and waves a sign, says bad things or shows a picture of things that aren’t true, he said. But until these people take action – until they steal some pigs or commit an act of violence – it’s their right to do that.

“It’s a hard pill to swallow, but it’s something that if you go to the FBI, they’ll say sympathy versus action,” Rose said. “Don’t take that action.”

How Can You Protect Yourself and Your Farm?

1. Pay attention to the threat actors.
Know who the threat actors are, including transnational terrorist groups, domestic terrorists, corporate espionage and activists. Engage with organizations like the Animal Agriculture Alliance and Protect the Harvest to keep up to date on threats and movements. Subscribe to their newsletters and learn from their experts.

2. Guard yourself on social media.
“Not only is social media a real threat, it’s an ongoing threat,” Rose said.

When he’s speaking to agricultural audiences, the first thing he tells them to do is go to Facebook, click on their privacy settings, and find out which apps and websites they are connected to with their account. Some apps can trick you into clicking “OK” allowing them to sell your information to third parties.

“There are computer programs scraping every bit of social engineering that’s publicly available on every human being and compiling it so they have those demographical profiles, whether it’s specific to you as an individual, or you as a class of individuals for certain types of messaging,” Rose said.

3. Beware of passive insider threats.
Passive insider threats are people who resist change and fall victim to social engineering. Sometimes, they’re told to do certain phishing exercises, or complete multi-factor authentication for their accounts, and they ignore it.

“They use their work devices to go to personal websites or places they probably shouldn’t go and they click on things they shouldn’t click on. Every employee of every company or organization is part of its cybersecurity defense,” Rose said. “If they’re not paying attention, if they’re not actively aware of the opportunity that threat actors are looking for, and they’re just letting them in, that’s a big insider threat.”

4. Know your FBI agent.
If something happens to your organization, whether it’s a terrorist attack or cybercriminal attack, it’s likely you will be in a high state of emotion. Rose said that’s probably the last time you want to make your first introduction to your FBI agent.

“There are 56 field offices across the United States. The FBI is there to help victims of crimes, they’re not going to go through your filing cabinets and look for other things. They want to help you. They want to figure out who did it, how they did it, and they want to go and oppose risk and consequence on your behalf,” Rose said.

That is why he suggests calling your local FBI agent or at least finding your point of contact before a problem happens.

“The world will never be the way it was – those days are gone, it is not coming back,” Rose said. “The world is as it is today, and we need to be realistic about how it’s going to be tomorrow. The ability for us in the U.S. to feed our population, that’s the North Star. Let’s make sure we do that. Be suspicious and be aware, this is a different world.”

Check out Farm Country Update and learn more from Andrew Rose about how you can protect yourself, your farm and your agricultural business.

Top 5 Risks on Your Operation: Are You Prepared?

Thu, 22 Sep 2022 17:04:00 GMT

How well prepared is your operation to manage risk?

For ag operations, oftentimes successful risk management can make the difference between an operation that runs like a well-oiled machine versus one that seems to constantly be swimming just to stay above water.

“Depending on how your operation runs and where you leverage your pain points, then we can help you put together a risk management plan to make sure that you’re not going to have big effects from your risk areas,” says Ross Bronson, an ag risk consultant with Redd Summit Advisors.

Additionally, well-managed risks could make the difference in an operation surviving into the next generation.

Here’s a look at the top five risks found in ag operations:

Legal—such as liability, contractual obligations—This includes typical operational tasks, such as delivery of products, as well as an accident that may have occurred on your operation. In severe cases, this risk factor will be best managed alongside a lawyer who is familiar with agriculture, trustworthy and has your operation’s best interest in mind.

Human—such as employee satisfaction, including family members—Though often overlooked, this risk is an important piece of the puzzle. Is the environment of the operation safe, mentally sound and healthy for all involved? Are family members working on the operation treated fairly compared to other employees?

As Bob Larson, DVM, says, “If you actually go back and see why family farms and ranches don’t survive another generation, a lot of times it was the human side—family relationship fractures and problems with your landlord and things like that.”

Financial—such as record keeping, as well as taxes, bills and debt—Is your operation actually profitable? Knowing where your operation stands financially through the use of cash-flow statements and balance sheets can be helpful.

Production—utilizing resources to create a sellable return—Looking at your operation, ensure assets are being managed properly and are performing adequately. What is the operation’s average mortality rate of livestock? Are your current bushels per acre comparable to a 10-year average? What changes could be made to increase profit on the operation? Take time to analyze your production practices to ensure your operation returns the most per acre or asset.

Marketing—strategic planning in covering risk of marketable products—Is your current marketing plan providing the best return? Are there value-added programs that could increase profit without increasing labor, time and resources? Forward contracting harvested grain, contracting feed prices at profitable levels and hedging can be ways to manage risks in a commodity-based market.

Which of these areas does your operation do well? Where can your operation improve?

Find a trusted advisor to help you make changes to your operation, if needed, to better manage risk and ensure success in the generations to come.

Is Your Insurance Keeping Up with Increased Building Costs?

Wed, 16 Jun 2021 12:00:04 GMT

If you haven’t priced a new confinement building recently, you may be surprised at the increase in prices. “We have seen a drastic rise in new construction costs,” said Fritz Richards, Hog Slat’s National Sales Manager. “Increases in lumber, steel, concrete, and labor have all contributed to pricing that is roughly 20% higher than last year.”

This increase means that a facility on your farm that cost $500,000 to build several years ago now has a replacement cost closer to $600,000.
Even if your policy includes an automatic inflation guard to cover annual inflation, your coverage has probably not kept pace with this unexpected spike in building costs. To be protected against loss, your coverage should equal the cost to rebuild it.

It is also important to know how the insurer calculates the actual value to replace the facility. Actual Cash Value (ACV) and replacement cost value (RCV) are methods that insurance companies use to assign value to the property. ACV reimburses you for lost property with depreciation included. It looks at current replacement costs and subtracts for age and overall condition of the barn. It is not likely to fully replace your building. RCV assigns value without factoring in depreciation. It pays the total replacement value minus any deductible.

The difference in premium can be substantial, so choosing which coverage is best for you depends on your situation. RCA coverage will typically be more expensive but offers peace of mind if your facilities are damaged or lost. In some cases, your lender may require you to pay for RCA to protect their loan. A less expensive ACV policy may a better option if your operation has the means to cover the costs of replacing or repairing the structure.

Another situation in which an ACV policy might be a better choice relates to older buildings. Most RCV policies contain a provision requiring only the payment of the ACV amount until the repairs are actually completed. The insured is then entitled to the “holdback” or the difference between ACV and the full payment. If the owner doesn’t plan to replace an aged building if lost or damaged, they will not receive the RCV payment.

Most insurance policies also content a coinsurance provision which requires you to insure your building value at 80% to 100% of the value needed to replace the building. If you are buying insurance at the old cost, you could suffer a coinsurance penalty and not recover the full replacement cost.

$500,000 Insured Value
$600,000 Replacement Value
80% Coinsurance = $480,000 required
Adequately insured based on 80%, but the insurer only pays insured value of $500,000 for the claim.

$500,000 Insured Value
$600,000 Replacement Cost
100% Coinsurance = $600,000 required
Insurer is obligated to pay only 83% ($498,000) and you coinsure 17% ($102,000).

Excluding land, confinement buildings are one of the largest purchases a farm owner will make. Working with your agent to increase coverage in the face of rising replacement costs ensures you are protecting your investment.

What Should You Do If Someone Breaks Into Your Farm?

Mon, 15 Feb 2021 17:24:32 GMT

If you notice something is not right on the farm or you see evidence of a break-in, it’s time to activate your plan to protect your farm.

“We’ve seen instances where activists have broken into farms and stolen livestock, but not come forward until months later. Any sign of trespassing or anything being out-of-place on your farm should put you on high alert, even if you aren’t sure it is related to activism,” said Hannah Thompson-Weeman, vice president, strategic engagement at the Animal Agriculture Alliance during a presentation at the Iowa Pork Congress last month.

So, how should you respond to a break-in?

1. Stay calm.

2. Contact your supervisor.
First, call your supervisor, but then call the barn owner and local authorities, she recommends.

3. Check for cameras.
“If you do find a camera or other recording device, it’s really important that you do not attempt to remove it yourself. Call law enforcement first so they can come out and observe its location and check for fingerprints,” she said. “Be on the lookout for cameras in any areas where animal handling occurs, especially sensitive procedures like euthanasia.”

Keep in mind that today’s cameras are very small. Activists are getting better at mounting the camera along with hotspots so they can stream footage to a cloud storage system.

4. Focus on people care and animal care.
Animal care and the wellbeing of employees need to remain top priorities, even in times of crisis or as you focus more on farm security, Thompson-Weeman said.

“Being beyond reproach in terms of animal welfare and caring for the environment is not only the right thing to do, but it is one of the most important things you can do to protect yourself from activist issues,” she said. “Employee morale is also critical, especially during a crisis situation.”

5. Put others on notice.
“Once the immediate crisis has been handled, make sure to notify your state association as well as the Animal Ag Alliance. Groups like ours can provide advice on how to proceed as well as collect information to spread the word to others who might be targeted,” Thompson-Weeman said.

If there’s a known activist in the area, the pork industry has become really good at information sharing with each other. Tell neighboring growers as much as you can – whether that’s sharing makes and models of cars, license plates or descriptions of the suspect. The more information you can share with others, the more likely you’ll be able to catch the activist in action.

Don’t confront
If you are approached by an activist on your farm or catch an activist in action, don’t confront them. Remember the goal of most activists is to agitate and make you look foolish and lose your cool for the camera, Thompson-Weeman said.

“It’s almost a guarantee that if you are interacting with an activist, they are either recording you or livestreaming on social media, meaning you’re being watched by hundreds or thousands of people. They will repeatedly make accusations or ask heated questions to try to get you to react and engage with them. It’s important not to take the bait,” she said. “You do not owe them any answers, and they aren’t really interested in information anyway. Keep your cool and only interact with them to ask them to leave and notify them of trespassing.”

Having a plan in place with your team makes these situations a little easier. Know who’s going to lock the door, who will call the authorities – make sure you walk through the plan and delegate responsibilities.

Don’t live in fear
“Don’t let the fear of animal rights activism stop you from doing the job you’re passionate about or proactively engaging with consumers and influencers about pork production,” Thompson-Weeman said. “You might never encounter any of these issues, and I hope you don’t, but if you do you will be very thankful that you took the time to create a plan.”

Read more:

When Something’s Not Right: 5 Ways to Protect Your Farm From an Activist Attack

The Evolution of Animal Activism on Farms

Protect Yourself from Online Activism

What’s Next for Animal Activism in 2021 and What Can We Do About It?

When Something’s Not Right: 5 Ways to Protect Your Farm From an Activist Attack

Wed, 10 Feb 2021 16:07:34 GMT

Preparation is the best defense, especially when it comes to an animal activist attack. Although no one wants to imagine an animal activist infiltrating their farm, having a plan in place is a wise practice.

1. Develop a great relationship with your local authorities and neighbors.
Have a plan developed with local authorities and neighbors if your farm were to be attacked by activists.

“Proactive outreach is really important. You need to build relationships with local law enforcement and other key audiences before there is an issue,” said Hannah Thompson-Weeman, vice president, strategic engagement at the Animal Agriculture Alliance during a presentation at the Iowa Pork Congress last month.

Set up a meeting with local law enforcement to share what issues farms and other animal agriculture operations are dealing with and get their recommendations. Who should you contact if there is an issue? What are their recommendations for dealing with trespassers or other incidents before they arrive?

“It’s beneficial for first responders to know the location and layout of your farm for other reasons as well, such as responding to natural disasters or other farm emergencies,” she added.

2. Make a list of emergency numbers.
Always have your emergency numbers handy, including how to reach your barn supervisor, barn owner, police force, sheriff, EMS and fire department.

“Make sure you keep these contacts up-to-date,” she said. “The last thing you want to deal with if a crisis is unrolling is realizing you don’t have someone’s current email address or phone number.”

3. Report break-ins.
If you have a break-in on your farm or something is out of place, report it not only to local law enforcement, but also your state associations and the Animal Agriculture Alliance. Don’t question yourself if you feel a nagging sense that something is wrong.

“Gather as much information as you can about the incident – vehicle descriptions, names and descriptions of people involved, etc.,” Thompson-Weeman said. “Tracking these incidents helps identify trends as well as allows authorities to warn others who might be targeted.”

4. Invest in surveillance equipment.
Consider purchasing some surveillance cameras. Thompson-Weeman said some Alliance members have shared that trail cams and Arlo cameras are easy to get, relatively affordable and easy to install. If you start to question things around the farm, get your cameras up and running so you can monitor what’s happening when you aren’t around.

5. Know the laws.
Know the laws and the laws in your state. Understand what you should do in the event of a protest. Find out the rules on protecting your private property. Learn what rights drones do and don’t have when it comes to flying over your farm. As with all things, work with local law enforcement to learn what’s acceptable.

Read more:

The Evolution of Animal Activism on Farms

Animal Rights Activism: You Need to Protect Your Farm

Protect Yourself from Online Activism

What’s Next for Animal Activism in 2021 and What Can We Do About It?

Is the Livestock Industry Prepared for a Foreign Animal Disease Outbreak?

Wed, 10 Feb 2021 16:07:03 GMT

Foreign animal diseases (FAD) are a constant threat to the U.S. livestock industry. But the country seems more tuned in to this struggle than ever before with the recent COVID-19 pandemic. National Pork Board’s chief veterinarian Dave Pyburn and National Cattlemen’s Beef Association’s chief executive officer Ethan Lane shared their perspectives during the Coalition for Epi Response, Engagement and Science (CERES) Biosecurity Infectious Disease Symposium at Colorado State University on how prepared the pork and beef industries really are when it comes to the threat of FADs.

Pork Industry Adopts AgView
When African swine fever (ASF) was discovered in China in August 2018 and rocked the global pork industry, the National Pork Board, among others, began looking at ways to increase foreign animal disease preparedness efforts in the U.S. One of the many positive steps forward since then has been the creation of AgView, a voluntary option for producers to keep records on animal movement that could be easily shared with their state veterinarian in the case of a FAD outbreak.

“We wanted to find a way to add to that data that’s currently available to both state and federal animal health officials as they look to respond to a FAD. Not only did we want to help find the disease more quickly and eradicate the disease more quickly, but also get back to some business continuity as quick as we can,” Pyburn said.

After evaluating the current preparedness plans, the National Pork Board decided one area the industry needed to hone in on was pig movement and contact tracing.

“That’s the majority of the way that we move animal diseases in our country today – through animal movement,” Pyburn said. “So, we asked ourselves how we could supply real time pig movement data to officials so that they could have the information needed to respond more efficiently and quickly to enable business continuity to whatever degree possible.”

That’s where the idea of Ag View came into the picture – creating an opportunity to work hand-in-hand with current systems in place and ultimately help improve that response.

Beef Industry Sees Similar Challenges
Lane said he sees a lot of similarities between what the pork industry is doing and what the beef industry is doing in the area of FAD preparedness.

“I think we’re trying to tackle a lot of the same challenges, in accessing that information and interfacing with a lot of different state programs,” Lane said. “The states are all warehousing data in different ways, that’s a lot of what cattle trace has been focused on and what our inner NCBA working group has been focusing on.”

Dealing with different views from producers, making sure they are assuaging everyone’s concerns about how information like this can be used to help them and balancing all of this against the need to quickly access information in the event of an outbreak, is a challenge, he explained.

“Whether it’s debating how many different data points are really necessary to quickly get to the right information or how do we ensure the safety and security of that information to some practical challenges on the ground, particularly with cattle movements,” Lane added. “If you look at our Western guys that are using pastures and grazing permits sometimes in different states, a pasture ID versus centering that on a home ranch operation. Those become very important data points to work through and that’s been a large part of the focus on our conversation over the past few years.”

Teaming Together
The AgView system could be launched for other livestock species, Pyburn said. Discussions have been underway between the pork and beef industries about how this system could bring other commodities and their information into this same system.

“In the end, what the federal and state animal health officials want is one dashboard to be able to use no matter what that foreign animal disease is,” Pyburn said. “We’ve got some foreign animal diseases, like foot-and-mouth disease in particular, that will involve both of us so it we’re going to want all of that data in one spot for those folks to respond.”

In addition to teaming together among species, Pyburn said it requires a team effort from producers, too. AgView is 100% voluntary. The nice thing about AgView is that producers can have their current data in the system, and it’s only visible to the producer that has entered the data, he said.

“The only time the data goes forward is if we actually have a foreign animal disease outbreak and there’s a need for it because the producer is involved in the incident or is within the outbreak area. When that happens, the state or federal animal health officials will request permission from those producers to be able to see it,” Pyburn said.

The producers still have the right to say no and that data will go nowhere. But Pyburn cautioned that may also hamper the animal health official’s ability to get back to some animal movements that would ensure business continuity.

“I think there’s going to be some need, or some want on the part of the producer, to be able to supply that data,” he said.

Meanwhile, on the cattle side, Lane said the industry is likely moving into an arena over the next few years where there is going to be a mandatory component for producers that are moving cattle across state lines.

One of the concerns Lane often hears is the cost and the fact that at the end of the day, a lot of the cost will be borne by those producers on the ground.

“We are going to need to have more extensive conversations on Capitol Hill,” Lane said. “We are going to probably be seeking out additional resources to implement a more comprehensive system so that cost isn’t being borne solely by the beginning of the supply chain.”

Watch these webinars for more:

Don’t Take Your Eyes Off of African Swine Fever

Technology, Traceability and the Beef Industry of the Future

Read More:

What Happens If? An Answer to the Question Everyone’s Asking

Vilsack Weighs In On Parallel Between COVID-19 and Animal Disease Outbreaks

Ranchers Split on Need for Traceability System

African Swine Fever: Trust Your Instinct, Be Prepared

What Makes Foot-and-Mouth So Infectious?

Tool Helps Develop Custom Biosecurity Plan for Disease Prevention

7 Steps to Create a Biosecurity Plan

Look For An Interest Rate Hike Today

Thu, 19 Nov 2020 03:01:28 GMT

The following commentary does not necessarily reflect the views of AgWeb or Farm Journal. The opinions expressed below are the author’s own.

U.S. economic growth is strengthening and unemployment continues to trend downward, with the result being the Federal Reserve is likely to announce its first interest rate increase of 2018 today. Wall Street analysts are predicting the rate will move up by a quarter of a percentage point, to a range of 1.5% to 1.75%, the New York Times reported in an online article (nyti.ms/2FPN1yS) this morning.

Federal Chairman, Jerome Powell, will be chairing his first interest-rate policy committee meeting since coming on board at the Fed last month. At the end of the meeting, the U.S. Central Bank will issue a rate decision, policy statement, and updated forecasts on the economy and the path of interest rates at 2 p.m. Eastern. Powell will follow that with a press conference at 2:30 p.m. EDT.

Fed officials had indicated in December that they expect to raise rates three times in 2018. The Fed’s intentions are reflected in the so-called “dot plot,” which charts the expectations for future rate increases from every member of the Federal Open Market Committee (see below; source: U.S. Federal Reserve). Some analysts say a short-term economic stimulus could push the Fed to add a fourth rate move this year.

What will a rate increase mean to farmers? In general, interest rates impact the agricultural industry by affecting the cost of borrowing money, investment decisions and land values. Farm Journal analysts will be addressing the specifics in the days ahead. Keep an eye on our market specialists’ blogs here on AgWeb.com. You can find them in the lower right-hand corner of this page.

Strive for Continuous Improvement

Wed, 11 Nov 2020 05:09:39 GMT

It’s remarkable how production and cost efficiency of the pork industry have improved over the years. There’s been constant progress in almost every production aspect of the pig business and the need to continue is evident. Those who do not continue to improve will find themselves at the higher end of the cost range and likely struggling for survival.

It has been interesting to watch what we measure and then watch the industry chase that measure and make improvements. There are helpful database products available for comparing sow farm performance. Comparing production measures in a broader group allows us to see where we are as a business and what we should be working to improve. My goal is to provide some context for measuring farms on a broader platform and leveraging that information to make meaningful continuous improvement on your farm.

Profitability

The big picture starts with profitability. Those numbers aren’t shared from farm to farm, so they are harder to come by. I have, for years, used the Iowa State University profit model to have a sense of the trends in profitability and use it to understand how farms I’m familiar with will stack up.

Compeer Financial has kept a peer comparison from a financial standpoint for nearly 10 years, which helps us track progress on a large group of producers and verify the progress over the long term relative to the Iowa State Model.

The model shows that profits for 2017 averaged $9.43 per head. Factors driving that number will be discussed, but one has to realize this is an average that assumes the same number of pigs, at the same market weight, were marketed each month of the year. Breaking down the key drivers and understanding how your operation compares long term determine where the value lies.

Revenue relative to the LM_HG201

This model uses the LM_HG201 report (the National Daily Direct Hog Prior Day Report for Slaughtered Swine) on a daily basis to determine revenue, which averaged $66.41 per carcass cwt in 2017.

Tracking your sales revenue to some standard (in this case the 201) helps provide a picture of how you compete on revenue compared to the industry. There are a lot of price discovery differences in the industry today, some of which would bring revenue enhancements at different times in the marketplace. In 2017, that range of revenue was $65 to $78 per cwt equaling more than $25 per head.

Cost of production relative to the Iowa State Model

I think one of the best uses of this model is understanding how a farm’s cost of production compares to the industry as a whole. In other words, are your costs competitive? After watching for years and comparing a large share of this industry, the model is representative of the top 25% of the industry. Production costs in the model for 2017 averaged $61.75. Based on what I see, a range of $60 to $68 would capture costs for hogs raised in the upper Midwest.

Corn basis would obviously impact areas outside the Midwest, as the cash corn price in Iowa is used for the model. The range in costs would equate to more than $15 per head in the Midwest, probably a little more.

What drives farm performance?

The point is, there is wide variation in revenue, costs and resulting profitability. Knowing where you are and how to attack it is the critical management decision you will make in striving for continuous improvement.

For those producers wanting to know the next step, for me it is addressing the biggest drivers of farm performance (below) and recognizing there is not a good, widely used benchmarking system that compares them.

Don’t Be Fooled: The Sky Isn’t Falling

Wed, 11 Nov 2020 05:09:35 GMT

As we approach the beginning of the barbeque season (at least in terms of demand for ribs), we are not among those crying out that the sky is falling. There is no doubt a certain amount of transient uncertainty has weighed upon the market recently; however, every major strength we previously mentioned as characteristic for the coming year is still largely in place.

Feed Costs

Cost of feed is up marginally due to small increases in corn and soybean meal prices. These increases are part of the normal fluctuations that happen during a year as weather patterns shift (Argentine drought), global demand increases or decreases, and government policy activity becomes activist. The Argentine drought substantially reduced their offerings to the global market, which provided new optimism for corn producers that the U.S. would step in to fill that gap with increased exports. USDA expects to add 5¢ or less to the bushel price of corn, which is below cost of production levels now.

Expected Production Increase

Record U.S. pork production continues to inch higher as the last Hogs and Pigs Report indicated. Pigs per litter and total productive capacity are up as expected with total production for the year expected to be in the 3% to 4% range. However, these increases are part of a well-planned advance in total capacity for U.S. production, not the unbridled enthusiasm of thousands of individuals deciding to increase production based on unrealistically high future profit forecasts. The normal seasonal pattern would continue to pressure U.S. pork prices through mid-April and then the summer seasonal rise should begin.

China in Perspective

We have a firm belief the China tariffs and the NAFTA posturing will be shown in retrospect to be “tempests in a teapot” for U.S. producers. The outlook is based on the fundamentals of the global market and here, the U.S. is in a commanding position. We know that after several years of massive investments in pork production by China, their markets are now signaling the major production companies to slow down. This slow-down takes up to two years of punishment to reach a kind of equilibrium as “work-in-progress” continues to grow and reach the marketplace for many months after reduced breeding decisions are made.

Added to that, not all companies decide to stop growing at the same time as each has a different cost structure and set of risks that either allow it to continue when others must stop or be among the early slow-down group. Eventually, everybody gets the message. Placing a tariff on U.S. pork when you don’t need it is designed for the political impact, not financial impact. We are not taking the bait.

Finding the Best Price Points

China has been a careful shopper on the world market both for production inputs and for needed pork imports. The Chinese know how to range out and divide purchases, for instance, among global suppliers to help create the best purchase price points. This is nothing new. There are also many indirect pathways for merchandising pork that can move it legally through and among nations. Keep thinking global low cost, high quality, high safety, dependable supplier and you will see clearly when the news headlines get others’ blood pressure rising.

We’re Still Optimistic

We still believe rising global income in 2018 will produce record demand for pork, and U.S. offerings will have no difficulty finding a home among that demand.

Remember, the new Korean export agreement, recently revised after similar hand-wringing and hubbub, means U.S. pork now moves into that country essentially duty free, and the results for February (the latest available) show an increase in volume of about 33% and an increased value of over 40%, as reported by the U.S. Meat Export Federation (USMEF). It was reported to be the first negotiated trade agreement revised in U.S. history. By the way, the USMEF also reported record-breaking consumption of pork by South Koreans as the Bank of Korea raised the national income growth forecast to 3% just a couple of weeks into 2018.

Adding to that is the increasing demand for U.S. pork from Central and South America. Mexico, the biggest volume purchaser, and Japan, the biggest value purchaser, both increased total value of purchases in February over the previous year per USMEF, while recent trade agreements are substantially boosting export growth in several countries in the southern hemisphere. Colombia, Honduras, El Salvador and Peru are among that group.

Higher Domestic Consumption

Lower prices in the U.S. marketplace early in the year coupled with increased disposable income due to tax cuts will boost domestic consumption and start the summer cooking season off a little earlier given favorable weather. The most recent forecast for spring and summer by the Weather Network predicts normal rainfall for the Midwest with above-normal precipitation for the northwest Corn and Wheat Belts. That’s good news as they have been in drought conditions for a couple years. Midwest temperatures are expected to be above normal this summer, which should slow down pig growth and boost prices, bringing a normal seasonal price pattern. The other consequence of normal to above-normal precipitation and hot temperatures is a bigger corn crop than anticipated.

Don’t panic at headlines screaming how fast weaned pig prices are falling. They are following the typical seasonal decline that happens every year at this time. While the trajectory down recently became a little steeper than normal, it is in line with the trade uncertainty that seems likely to leave the marketplace in the next several weeks.

Danger or Data? Avoid the Trap Upending Operational Stability

Wed, 11 Nov 2020 05:08:24 GMT

As a risk management resource, we are witnessing, up close and personal, the havoc and panic inspired by the current political debates over economic sanctions and also the manifestation of significant animal health challenges. People pull the trigger too quickly or, paralyzed by uncertainty, fail to pull the trigger when necessary. Meeting unpredictable production challenges with unpredictable decision-making behaviors is creating anxiety among producers. We want to manage our own responses to volatility so as to not add to the culture of anxiety.

We’ve all experienced what happens when we indulge in urgency-based assessments: broken relationships, risky investments, impulsive hires or acquisitions and stubborn positioning. Economic, relational, industry and other environmental triggers that disrupt our routines and expectations (even in a good way) can trip us into emotional, chemically-inspired “autopilot.”

Many of us will have a “gut” reaction when surprised—sinking in the pit of the stomach, a wave of facial heat, sweaty palms and racing heart. This is an evolved, primitively-wired response to threats or excitement, shored by a chemical rush of glutamate released by the amygdala in your brain.

Urgency-based, unpredictable or unanticipated events—especially those that involve potential loss of resources or opportunities, or ones that threaten our physical and emotional security—can trap us into defensive, risky, anxious or rigid thinking patterns that inspire impulsive behaviors.

Our Triggered Brain and the Tiger Around the Bend

The key focus here is “unpredictable,” because, without models, methods and the capacity to manage our urgency-based responses, our primitive programming takes over and gears us for one of two modes: react (fight or flight) to the threat; or seize the opportunity (excite) for fear of missing out. This false and bodily sense of urgency and the impulse to protect, defend or hoard can trigger execution that often upends operational stability. It’s not uncommon for entrepreneurial founders to overextend themselves, their labor force and their operational line of credit for fear of missing an opportunity, or in response to a perceived (but marginally validated) threat.

What happens to our logical, linear selves in situations where we recognize threats or opportunities? Our primitive brains were equipped with two modes—experience and execute. This worked wonderfully when we fled saber-toothed tigers or relied on a glutamate-induced boost for finding food and shelter.

Somewhere along the line, the human brain evolved to incorporate “pause” as part of the process that allows for innovation (fire, engineering shelter, engaging in opportunistic relationships), creativity, collaboration, assessment and empathy. These behaviors steward relationships and resources as a higher function for long-term sustainability and capacity building rather than short-term survivability. That pause part of the brain collects environmental information as objective data rather than threat and allows us to slow down to reflect and interrogate reality. It’s this part of the brain that overrides aggressive, impulsive and instant self-gratifying behaviors in favor of assessment, innovating and opportunistic ones.

Thoughts and Feelings Are Not Truths

We can’t stop our primitive brain from responding to “danger” when we feel exposed or excited. Our brain defines truth as our experience of reality; but our experience is not truth. In any situation, especially in an urgency-based one, we serve ourselves and others better by inviting the pause part to mediate, mitigate, manage and contextualize environmental data in a way that allows for a reactionary response but doesn’t indulge it.

We can change habits and create practices so that the danger response becomes an indicator or invitation for data collection and reflection, rather than a trigger to attack or shut down. With some deliberate practices, we can override our instinct to protect and react and look to those urges as indicators for awareness, curiosity, slowing down and deliberation.

Decision-Making Fatigue and Impulse Control

Another complication characterizing the current urgency-based climate is our brain’s limitation to manage the ceaseless flow of decisions associated with ownership. The human brain has only so much capacity to align intellectual and emotional resources associated with decision-making, and the brain doesn’t distinguish between “Who is going to the grocery store?” and “Do I want to have a million dollar margin call?“

At some point, we suffer “decision-making fatigue” (see the book “Willpower”). If you only have a cup of sugar (resources and energy) to allocate to figuring things out, and if you are asking for more when you’re on empty, you are likely to resort to the least common behavioral denominator: paralysis (nothing happens), avoidance (nothing happens) or impulse (get this off my plate so I don’t have to deal with it).

This is the time to use your pause brain and deploy strategies: create protocols for decision-making; prioritize decisions and align them with prime time (before 12 noon); eliminate less relevant decisions or defer them to appropriate stakeholders.

See Part 2: Awareness and Self-Management of Evolved Entrepreneurs